British Telecom Tests VPN Service In Shanghai Free Trade Zone

British telecom operator BT just submitted an application to China’s Ministry of Industry and Information Technology to gain a license to operate a value-added telecom business in China’s Shanghai Pilot Free Trade Zone.

The license is related to BT’s VPN value-added service, which it sells to companies in China who rely on virtual private networks. There are many companies who already provide VPN services in China, including China Unicom, China Telecom, 21Vianet, Diyixian, and Neusoft, but many foreign companies choose foreign providers like BT or AT&T for these types of services in China.

The company said no further detail is available on the scope of their VPN service as they has not yet received their license.

Both foreign and Chinese media often erroneously report that VPN services are illegal in China, but these types of privacy services actually have always been legal in China. Danny Levinson, founder of China-based VPN provider Kovurt.com, says journalists don’t understand how business is done in China or what is legal or how companies register their scopes of businesses, so often misinformation is spread.

Levinson says, “When you sign an office lease in China, often the first guys knocking on your door are the telecom company who offer a menu of services including VPN services. VPN services are legal in China, but companies who are unregistered in China are not legally allowed to sell their unregistered services. So foreign companies like AT&T, Cisco, and BT need to get the correct licenses before they can sell. VPN services are illegal if sold by an unlicensed provider, but legal if sold by a company whose scope of business includes that type of service.”

During the World Economic Forum held in Dalian in September 2015, BT China president He Weiqin said that BT was actively applying for its value-added business license in China. On May 18, 2016, BT Group chairman Michael Rake revealed that he recently visited MIIT and was seeking opportunities to bring BT’s products and technologies to the Shanghai Pilot Free Trade Zone. With the boom in fintech, online payments, and e-commerce in China, VPN services complement the privacy and security needs of companies in China.

BT is reportedly the largest broadband operator in U.K. In the financial year ended March 31, 2016, BT Group realized revenue of about GBP18.9 billion, which was about CNY180.4 billion; and its profit before tax was about GBP3 billion, which was about CNY28.9 billion. On January 29, 2016, BT completed its acquisition of EE, the largest mobile operator in U.K., for about GBP12.5 billion.